Sallie Mae Buyout

SLM Holding Corp - Sallie Mae SLM
$25.2B Buyout - Terminated Deal

Buyout of leading student loan company

By buyout group led by J.C. Flowers & Co
$60 per SLM share; $25.2B total
SLM news - stock chart
Background of the Merger

Announced 4.16.07

Buyers warn on closing conditions

Recent pending legislative proposals "could result in a failure of the conditions to the closing of the merger to be satisfied."
College Cost Reduction and Access Act of 2007 ("CCRAA") was signed into law by the President on September 27, 2007, resulting in, among other things, a reduction in the yield received by the Company on FFELP loans originated on or after October 1, 2007

House voted to cut federal subsidies
HR 1010; also see S 572
Stock falls from $58 to $52 per share on 7.11
SLM press release 7.11.07

Buyers don't expect to close

SLM press release 9.26.07
SLM "believes that the buyer group has no contractual basis to repudiate its obligations under the merger agreement and intends to pursue all remedies available to it to the fullest extent permitted by law."

Deal Terminated

Deal was terminated on Jan 25 2008

Form 8-K
SLM lawsuit seeking payment of $900mm break-up fee was dismissed
Bank of America and JPMorgan Chase extended SLM $30B in asset-backed commercial paper conduit facilities

Buyers don't expect to close

SLM press release 9.26.07
SLM "believes that the buyer group has no contractual basis to repudiate its obligations under the merger agreement and intends to pursue all remedies available to it to the fullest extent permitted by law."

Buyers warn on closing conditions

Recent pending legislative proposals "could result in a failure of the conditions to the closing of the merger to be satisfied."
College Cost Reduction and Access Act of 2007 ("CCRAA") was signed into law by the President on September 27, 2007, resulting in, among other things, a reduction in the yield received by the Company on FFELP loans originated on or after October 1, 2007

House voted to cut federal subsidies
HR 1010; also see S 572
Stock falls from $58 to $52 per share on 7.11
SLM press release 7.11.07

Recent pending legislative proposals "could result in a failure of the conditions to the closing of the merger to be satisfied."
SLM press release 8.06.07

Buyout group

J.C. Flowers & Co
Friedman Fleischer & Lowe
JP Morgan Chase
Bank of America

Financial

SLM: UBS / Sandler O'Neill / Greenhill
Buyers: JPMorgan / Banc of America Securities

Legal

SLM: Davis Polk
Buyers: Wachtell
JC Flowers: Sullivan & Cromwell

Merger Agreement

General

EDGAR filing
Hyperlinked version
Detailed hyperlinked index follows

Article 1 Definitions

1.01 Definitions
1.02 Other Definitional and Interpretative Provisions

Article 2 The Merger

2.01 The Merger
2.02 Conversion of Shares
2.03 Surrender and Payment
2.04 Stock Options; Restricted Stock Units; Restricted
Stock and Equivalents
2.05 Adjustments
2.06 Withholding Rights
2.07 Lost Certificates
2.08 Dissenting Shares
2.09 Preferred Stock

Article 3 The Surviving Corporation

3.01 Certificate of Incorporation
3.02 Bylaws
3.03 Directors and Officers

Article 4 Company Reps

4.01 Corporate Existence and Power
4.02 Corporate Authorization
4.03 Governmental Authorization
4.04 Non-contravention
4.05 Capitalization
4.06 Subsidiaries
4.07 Sec Filings and the Sarbanes-Oxley Act
4.08 Financial Statements
4.09 Disclosure Documents
4.10 Absence of Certain Changes
4.11 No Undisclosed Material Liabilities
4.12 Compliance with Laws and Court Orders
4.13 Litigation
4.14 Finders Fees
4.15 Opinions of Financial Advisors
4.16 Taxes
4.17 Employee Benefit Plans
4.18 Environmental Matters
4.19 Real Property
4.20 Material Contracts
4.21 Anti-takeover Statutes
4.22 Insurance
4.23 Derivative Transactions
4.24 Agreements With Regulators
4.25 Securitizations
4.26 Student Loan Portfolio

Article 5 Parent Reps

5.01 Corporate Existence and Power
5.02 Corporate Authorization
5.03 Governmental Authorization
5.04 Non-contravention
5.05 Disclosure Documents
5.06 Litigation
5.07 Finders Fees
5.08 Financial Activities
5.09 Financing
5.10 Solvency

Article 6 Covenants of the Company

6.01 Conduct of the Company
6.02 Stockholder Meeting; Proxy Material
6.03 Solicitation; Other offers
6.04 No Control of Other Partys Business

Article 7 Covenants of Parent

7.01 Conduct of Parent and Merger Subsidiary
7.02 Obligations of Merger Subsidiary
7.03 Voting of Shares
7.04 Director and Officer Liability

Article 8 Covenants of Parent and the Company

8.02 Certain Filings
8.03 Public Announcements
8.04 Further Assurances
8.05 Access to Information
8.06 Notices of Certain Events
8.07 Confidentiality
8.08 Employee Matters
8.09 Financing
8.10 Convertible Notes

Article 9 Conditions to the Merger

9.01 Each Party
9.02 Parent and Merger Subsidiary
9.03 Obligations of the Company

Article 10 Termination

10.01 Termination
10.02 Effect of Termination

Article 11 Miscellaneous

11.01 Standard
11.02 Notices
11.03 Survival of Representations and Warranties
11.04 Amendments and Waivers
11.05 Expenses
11.06 Disclosure Schedule References
11.07 Binding Effect; Benefit; Assignment
11.08 Governing Law
11.09 Jurisdiction
11.10 Waiver of Jury Trial
11.11 Counterparts; Effectiveness
11.12 Entire Agreement
11.13 Severability
11.14 Specific Performance

Proxy Solicitation

Definitive proxy statement 7.18.07

Preliminary proxy statement 5.25.07

Table of contents

Deal Protection

Background

Background of the Merger
Private equity buyout was explored in 2005

No shop covenant

Merger agreement §6.3

Proxy statement disclosure

Break-up fee

$900 mm, reciprocal
Agreement §10.2

Proxy statement disclosure

Regulatory Approvals

HSR Act

Merger agreement §8.1

Proxy statement disclosure

Fairness Opinion

UBS and Greenhill fairness opinion

Proxy statement disclosure

Disclosure

Proxy statement disclosure

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